THERE’S growing disquiet among WA’s cabinet makers amid claims the absence of competition in the laminate and board industry is leading to unjustified price rises from suppliers.
THERE’S growing disquiet among WA’s cabinet makers amid claims the absence of competition in the laminate and board industry is leading to unjustified price rises from suppliers.
Over the past three years Amatek Holdings, a subsidiary of European venture capital group CVC Capital Partners, has cemented its position in the market to an extent where it now controls around 80 per cent of the trade through the Laminex Group.
Seeking to capitalise on its successful consolidation of the industry, a planned listing mid year of the Laminex Group was called off at the 11th hour when New Zealand’s Fletcher Building placed an attractive $645 million bid on the company.
With shareholder approval of the deal all but guaranteed at the general meeting to be held on November 13, only the Australian Competition and Consumer Commission can stand in the way of the buyout by the New Zealand-based Fletcher Building group.
However, in a statement issued to WA Business News, the ACCC made it clear it would not reverse its earlier acceptance of the consolidation of the board industry.
“The ACCC has considered whether industry rationalisation would substantially lessen com-petition in the particleboard (PBD) or medium density fibre-board (MDF) markets in Australia,” the statement says.
“Following market enquires among competitors and customers, the ACCC has not op-posed rationalisation of particleboard manufacturing capacity due to ongoing competition between Fletchers, D & R Henderson and the major domestic manufacturer, CHH, and because the capital costs for entry into laminating of raw board into decorative board are low.”
The three-year process by Ametek’s Laminex Group included the purchase of CSR Ltd’s Formica business in 1999 and culminated with the takeover of WA public company Wesfi in January 2001.
Cabinet makers’ concerns that the lack of competition would result in poorer service and price hikes have been reaffirmed, they say, with a 4 per cent price rise in March and again this month.
Cabinet makers interviewed by WA Business News, some who wanted to remain anonymous, said that while the Laminex Group operated through three divisions – Formex, Formica and Laminex – each acted in unison when it came to price rises.
Confirmation to cabinet makers came in the form of three identical letters from each division to their clients on August 27, in which the Laminex Group announced it would be in-creasing prices from November 1.
Abbey Cabinets director Jeremy Louw said he was given only two weeks’ warning of the impending price hike.
“Its crazy. We can’t just go to our builder on short notice and tell them that we have to increase prices, so we have to wear it,” Mr Louw said.
A&A Kitchens managing director John Dykstra said he was concerned at the lack of competition in the marketplace.
Daniel Bosveld, managing director of WA’s largest cabinet maker, Coastline Kitchens, was less critical of the Laminex Group. Mr Bosveld said alternative suppliers could be used if the Laminex Group priced itself out of the market.
With the cost of materials amounting to 40 per cent of the final product any increases have a dramatic impact on tight profit margins.
Laminex Group WA manager Graeme Williamson defended his company’s position. He said the group had gone out of its way following the Wesfi purchase to keep prices low.
The only real alternative supplier is Alesco Group’s subsidiary Parbury FHS, which later this month is reverting to its old name, dropping FHS as part of a re-positioning toward the consumer market.
Parbury FHS director Eric White said it would be business as usual for the supplier.
Over the past three years Amatek Holdings, a subsidiary of European venture capital group CVC Capital Partners, has cemented its position in the market to an extent where it now controls around 80 per cent of the trade through the Laminex Group.
Seeking to capitalise on its successful consolidation of the industry, a planned listing mid year of the Laminex Group was called off at the 11th hour when New Zealand’s Fletcher Building placed an attractive $645 million bid on the company.
With shareholder approval of the deal all but guaranteed at the general meeting to be held on November 13, only the Australian Competition and Consumer Commission can stand in the way of the buyout by the New Zealand-based Fletcher Building group.
However, in a statement issued to WA Business News, the ACCC made it clear it would not reverse its earlier acceptance of the consolidation of the board industry.
“The ACCC has considered whether industry rationalisation would substantially lessen com-petition in the particleboard (PBD) or medium density fibre-board (MDF) markets in Australia,” the statement says.
“Following market enquires among competitors and customers, the ACCC has not op-posed rationalisation of particleboard manufacturing capacity due to ongoing competition between Fletchers, D & R Henderson and the major domestic manufacturer, CHH, and because the capital costs for entry into laminating of raw board into decorative board are low.”
The three-year process by Ametek’s Laminex Group included the purchase of CSR Ltd’s Formica business in 1999 and culminated with the takeover of WA public company Wesfi in January 2001.
Cabinet makers’ concerns that the lack of competition would result in poorer service and price hikes have been reaffirmed, they say, with a 4 per cent price rise in March and again this month.
Cabinet makers interviewed by WA Business News, some who wanted to remain anonymous, said that while the Laminex Group operated through three divisions – Formex, Formica and Laminex – each acted in unison when it came to price rises.
Confirmation to cabinet makers came in the form of three identical letters from each division to their clients on August 27, in which the Laminex Group announced it would be in-creasing prices from November 1.
Abbey Cabinets director Jeremy Louw said he was given only two weeks’ warning of the impending price hike.
“Its crazy. We can’t just go to our builder on short notice and tell them that we have to increase prices, so we have to wear it,” Mr Louw said.
A&A Kitchens managing director John Dykstra said he was concerned at the lack of competition in the marketplace.
Daniel Bosveld, managing director of WA’s largest cabinet maker, Coastline Kitchens, was less critical of the Laminex Group. Mr Bosveld said alternative suppliers could be used if the Laminex Group priced itself out of the market.
With the cost of materials amounting to 40 per cent of the final product any increases have a dramatic impact on tight profit margins.
Laminex Group WA manager Graeme Williamson defended his company’s position. He said the group had gone out of its way following the Wesfi purchase to keep prices low.
The only real alternative supplier is Alesco Group’s subsidiary Parbury FHS, which later this month is reverting to its old name, dropping FHS as part of a re-positioning toward the consumer market.
Parbury FHS director Eric White said it would be business as usual for the supplier.